Transportation Brief: Prop 22’s Impact on the Transportation Industry
November 2, 2020
The gig economy – spearheaded and underwritten by major gig economy companies such as Uber, Lyft, and Doordash – has launched a high-profile campaign to prevent the application of California’s AB 5 law (and the ABC test it dictates) to determine a worker’s employee status. By putting the question before California voters as Proposition 22 (Prop 22), proponents of this voter referendum hope to carve out a new “dependent contractor” status.
Prop 22 will appear on the ballot this November, writing yet another chapter of the independent contractor (IC) saga in California. Prop 22 establishes that gig economy drivers will be deemed to be ICs, but also provides certain guaranteed benefits and protections that would not be available to a traditional IC. For example, Prop 22 guarantees drivers minimum earnings (based off of 120% of the local minimum wage), full payment of tips, per-mile compensation for the use of the vehicle, a healthcare subsidy based on the average weekly amount of hours of “engaged time” a driver performs above a set minimum, and occupational accident coverage.
Not to be left behind, California state courts have also waded into the dispute, with at least one judge ruling that Uber and Lyft must treat their drivers as employees pursuant to the ABC test under current law while a lawsuit challenging the drivers’ IC status proceeds. Because the trial court order requiring the use of employees was stayed by the appellate court, Uber and Lyft are not required to transition to an employment model unless Prop 22 fails and the case is ultimately decided against Uber and Lyft.
Prop 22 directly impacts only those companies that use online applications or platforms to facilitate on-demand services using private passenger vehicles (e.g., core gig-economy companies such as Uber, Lyft, and Doordash). While a favorable outcome for Prop 22 helps support the general objection to the ABC test as expressed in AB 5, it will not have a direct impact on the greater transportation industry. Even more narrowly, a decision in the Uber and Lyft employment case requiring those companies to treat drivers as employees will emphasize California courts’ tendency in transportation gig economy fact patterns, but will not be directly transferable to the larger transportation industry as controlling precedent.
Transportation Brief: DOL Publishes IC Rule
by Shannon M. CohenOn September 25, 2020, the US Department of Labor (DOL) published a Notice of Proposed Rulemaking (NPRM) to develop a consistent test for determining independent contractor (IC) status under the Fair Labor Standards Act (FLSA).
Transportation Brief: Ongoing Developments with the FLSA Joint Employer Rule
by Kelli M. Block , A. Jack Finklea
Earlier this year, the US Department of Labor (DOL) implemented a Final Rule providing direction on joint employer liability for federal wage and hour violations.
Transportation Brief: No Circuit Split (Yet) on the FAA “Transportation Worker” Exemption
by Braden K. Core , Prasad Sharma , Ryan W. WrightIn the Summer edition of The Transportation Brief, we discussed the First Circuit’s recent holding that Amazon’s “AmFlex” delivery drivers are exempt from the Federal Arbitration Act (FAA), even if they do not cross state lines, because the goods they transport are moving in interstate commerce. Since then, the Ninth Circuit has agreed with the First Circuit in another case involving AmFlex drivers (over a strong dissent), while the Seventh Circuit reached the opposite conclusion (i.e., that delivery drivers are not exempt) in a case involving GrubHub.
Transportation Brief: Spotlight on Mergers & Acquisitions
by Gregory M. Feary , Kathryne S. Feary-Gardner , Andrew K. Light , W. Todd Metzger , Jay D. Robinson,News regarding independent contractor misclassification considerations continues to make headlines. Among the many reasons that industry leaders follow these developments so closely is their potential to materially impact a business’s sale—both for a seller or a buyer.
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